Posts Tagged 'banks'

Ireland first. Irish banks were in the news again this week. The share price of both Bank of Ireland and Anglo Irish Bank went below €1. The market capitalisation of Bank of Ireland is now less than €1bn.

Banks are still reluctant to lend money and need to be recapitalised. The Irish government don’t have the money to invest in the banks so it looks like foreign investors i.e. private equity firms such as Carlyle and JC Flowers will invest in the Irish banks. But at what price? You may have heard of the Carlyle Group in Michael Moore’s movie Fahrenheit 911.

Budget 2009 became law today with the passing of the Finance Bill. The Finance Act puts into law the changes made in taxation in the Budget. There have been some changes made since Budget Day on October 14th. However, according to the Financial Times, Brian Lenihan is the second worst Finance Minster in Europe. Portugal have the worst Finance Minister.

USA next. After the $700bn bailout of US financial institutions, now the US car industry is facing crisis. GM is facing bankruptcy and Ford is losing over $1bn per month. Today, the PSA Group, manufacturer of Peugeot and Citroen cars, announced they are cutting almost 3,000 jobs. The PSA group directly and indirectly employ 10% of all workers in France.

Another busy week for business news. Here’s a brief summary of developments during the past week.

The week began with Meltdown Monday– the largest one day points drop in the history of the DJIA (-777 points) and the single biggest daily percentage fall on the Irish market (-13%).

This was caused by the collapse of UK bank Bradford & Bingley and the large Dutch/Belgian bank Fortis last weekend. The failure of the US House of Representatives to back George Bush’s $700bn plan to help US banks and the collapse Wachovia, the fourth biggest bank in America, also sent stocks lower.

However, you need to put Monday’s fall in the Dow Jones in context. It was not the biggest daily fall in the Dow in percentage terms, only in points terms. The Dow fell 777 points but the percentage fall was 7%. The last big daily fall in the Dow Jones was 22% in the 1987 stock market crash. Read the following article and see how large falls in the Dow Jones occur every 7 years.

On Tuesday, there were rumours that at least one Irish bank was in danger of default. The government quickly responded by guaranteeing the safety of all deposits in the six Irish commercial banks – AIB, Bank of Ireland, Anglo Irish Bank, Permanent TSB, Irish Nationwide and EBS.

They have also guaranteed the repayment of loans given to these banks by other financial institutions. The total cost of this guarantee could reach €500bn. This is over twice our annual GDP and over 14 times our National Debt.

Question: What effect will the above guarantee have the Irish operations of UK and foreign banks here?

On Wednesday, the CSO released the latest unemployment statistics for Ireland. The number of people unemployed has increased by 50% or 80,000 people in one year. This is the biggest ever annual increase in the Live Register. Our unemployment rate (6.3%) is now the highest it has been in 11 years and is likely to reach 9% in 2009. Download the CSO report.

On Thursday, Facebook announced that it has chosen Dublin as its European Headquarters. Dublin is now the European HQ for internet companies such as Ebay, PayPal, Google, Yahoo and Amazon. They will be creating 70 jobs in Dublin. These are now the types of jobs that will be created in Ireland in the future. What type of workers are Facebook looking for?